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Facts
The assessee, a primary agricultural credit cooperative society, did not file a regular return. The AO issued a Section 148 notice, and the assessee filed a nil return claiming Section 80P deduction, which the AO disallowed under Section 143(3) read with Section 147, holding it was not a primary agricultural credit cooperative society. The CIT(A) dismissed the appeal for non-prosecution, leading to an appeal to the Tribunal with a 174-day delay.
Held
The Tribunal condoned the delay, finding sufficient reasonable cause. On the merits, relying on a Jurisdictional High Court decision, the Tribunal held that the assessee is entitled to a deduction under Section 80P(2)(d) for interest received from District Co-operative Bank and Treasury.
Key Issues
1. Condonation of delay in filing the appeal to the ITAT. 2. Eligibility of deduction under Section 80P for interest income earned by a primary agricultural credit cooperative society from District Co-operative Bank and Treasury.
Sections Cited
139(1), 148, 143(3), 147, 80P, 80P(2)(d), 80P(2)(a)(i)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
This appeal filed by the assessee is directed against the order of the ADDL/JCIT(A)-1, Nagpur [CIT(A)] dated 08.10.2024 for Assessment Year (AY) 2009-10.
Brief facts of the case are that assessee is a cooperative society registered under Kerala Co-operative Societies Act, 1969. It is classified as primary agricultural credit cooperative society. No regular return of income under the provisions of section 139(1) of Karayavattam Service Co-op. Bank Ltd. the Act was filed for the A.Y. 2009-10. The AO issued notice u/s. 148 of the Act on 30/03/2016. In response to the notice issued u/s. 148, assessee had filed its return of income on 06/11/2017 declaring nil income after claiming deduction u/s. 80P of the Act. Against the said return of income, the assessment was completed by the AO vide order dated 12/12/2017 passed u/s. 143(3) r.w.s. 147 of the Act by disallowing deduction claimed u/s. 80P by holding that the assessee is not a primary agricultural credit cooperative society.
Being aggrieved, an appeal was filed before the CIT(A), who vide impugned order dismissed the appeal of the assessee for non- prosecution.
Being aggrieved, the assessee is in appeal before this Tribunal in the present appeal with delay of 174 days.
The assessee filed a petition along with an affidavit seeking condonation of delay in filing the appeal, wherein it is stated that the delay had occurred due to inadvertent oversight in reviewing and responding to official communications including email intimation of the order under appeal. Hence, the delay is not willful or deliberate. Therefore, it is prayed that the delay in filing the appeal may be condoned and the appeal may be admitted for adjudication. Having regard to the averments made in the affidavit seeking condonation of delay, in the absence of any evidence contrary, I am of the considered opinion that the assessee society is prevented by Karayavattam Service Co-op. Bank Ltd. sufficient reasonable cause in filing the appeal within the prescribed limit. Accordingly, I condone the delay and admit the appeal for adjudication.
We notice that the issue related to interest income received from the District Co-operative Bank stands adjudicated by Hon'ble Jurisdictional High Court’s decision in the case of PCIT v. Peroorkada Service Co-op. Bank Ltd. [2022] 442 ITR 141 (Ker) wherein their Lordships have rejected the Revenue’s identical stand as under: - “12.2 Section 80P deals with Co-operative Societies' computation of income. As already noted, it has four sections and several sub-sections and clauses. The Parliament has considered the various situations in which the exigible income and the deductable income of the assessee is considered while computing the income of the assessee. For getting deduction, in our considered view, the assessee must also establish that the interest income earned by the assessee is from a Co-operative Society. As a matter of fact, in the case on hand, there is no dispute that it is not from a Co-operative Society registered under Kerala Co- operative Societies Act. The interest income earned from District Co- operative Bank/State Co-operative Bank, in the facts and circumstances of the case, do come within Section 80P(2)(d). Therefore, the income constitutes income from other sources and the only eligible deduction is covered by Section 80P(2)(d) viz. Interest or dividend derived by the assessee from its investments with any other Co-operative Society. The source of interest income is from Bank and Treasury, interest income received from Treasury be included in the computation of total income of the assessee. In other words, interest earned from Treasury is inadmissible for deduction and interest income from Co-operative Societies registered under the Kerala Co-operative Societies Act are eligible for deduction. The contra consideration of Commissioner of Income Tax (Appeals) and the Tribunal is incorrect and liable to be modified as stated above. Hence, it is held that the interest income earned by the assessee does not come within the ambit of Section 80P(2)(a)(i) and permissible deduction of interest income is limited to Co-operative Societies/Banks registered under Kerala Co-operative Societies Act under clause (d) of the Act and effect order on the above
Respectfully following the above decision of the Hon'ble Jurisdictional High Court, I hold that the assessee is entitled for deduction under section 80P(2)(d) of the Act on account of interest received from District Co-operative Bank and Treasury.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 31st July, 2025.